Back to top

Image: Bigstock

Which Solar Stock Will Win in Q2 Earnings? FSLR or SCTY

Read MoreHide Full Article

The Q2 earnings cycle is nearing its end. As of Jul 29, 73.5% of the market cap of the S&P 500 index have released quarterly numbers. Reported results reveal a 3.3% decline in second-quarter earnings due to a 0.9% dip in revenues.

Over 1000 companies, including 116 S&P 500 members, have lined up to release quarterly numbers this week and by the end of it, nearly 87% of the index members will have declared the same. Overall earnings are anticipated to witness a 3.4% decline due to 0.4% lower revenues, with 8 of the 16 Zacks sectors witnessing growth in the negative territory. The picture should become clearer by the end of this week after the majority releases results. For more details, you may go through our Earnings Trends report.

For companies operating in the renewable energy space, environmental considerations have been propelling demand for alternative sources of energy to a large extent. In fact, solar energy got a major boost from the environmental tax credit extensions of Dec 2015.

Further, the U.S. Energy Information Administration (“EIA”) anticipates total renewables used in the electric power sector to increase 11.2% in 2016. The EIA also projects utility-scale solar photovoltaic (“PV”) capacity to increase by nearly 13 gigawatts (“GW”) in the 2015–2017 period.

Two important solar stocks are scheduled to report second-quarter earnings in the upcoming days. Let’s see what’s in store for these two stocks in the second-quarter earnings season.

First Solar, Inc. (FSLR - Free Report) is set to report second-quarter 2016 earnings results after the closing bell on Aug 3. Last quarter, the company delivered a positive earnings surprise of 82.42%. This Zacks Rank #3 (Hold) stock has an Earnings ESP of -33.33%. Hence, it’s difficult to predict a positive surprise for this quarter.

During the first-quarter earnings call, the company revealed that earnings are expected to be slightly less than 50% in the first half of 2016, although it is subject to the timing of closing certain project sales. The company also stated that it was going through a transitional phase and expected to see higher module-only and module-plus types of revenues in the second quarter. A slight drop in earnings associated with the transition is also expected.

The Zacks Consensus Estimate for the company’s revenues is pegged at $904.4 million for the second quarter. This indicates a 1% year-over-year increase and a rough 7% sequential improvement. On the other hand, our estimate for earnings is pegged at 57 cents, reflecting 10.6% growth on a year-over-year basis. (Read more: What's in Store for First Solar This Earnings Season?)

FIRST SOLAR INC Price and EPS Surprise


Clean energy provider SolarCity Corporation SCTY specializes in solar power, energy efficiency and electric vehicle design, monitoring and maintenance services. Notably, on Aug 1, Tesla TSLA inked a deal to acquire the company for $2.6 billion in an all-stock transaction.

The company is set to report second-quarter 2016 results after the closing bell on Aug 9. Last quarter, it posted a negative earnings surprise of 11.30%. SolarCity currently carries a Zacks Rank #3 and has an Earnings ESP of -3.24%. The combination of SolarCity’s favorable Zack Rank and negative ESP makes surprise prediction difficult for the quarter.

During its first-quarter conference call, the company said that due a number of headwinds, customer acquisition costs were on the rise, which should however decline significantly in the second quarter.

Moreover, the company recently announced the installation of 201 megawatts (“MW”) during the quarter, which was higher than its expectations of installing 185 MW. For 2016, SolarCity now expects to install 900-1,000 MW of rooftop solar panels, down from its prior guidance of 1,000-1,100 MW.

The Zacks Consensus Estimate for the company’s revenues is pegged at $134.6 million for the second quarter. This is almost a 30.9% increase on a year-over-year basis. Meanwhile, our estimate for the bottom line stands at a loss of $2.47, reflecting a 53.4% decline.

SOLARCITY CORP Price and EPS Surprise


Stay tuned! Check later for our full write-up on earnings releases of these stocks.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

First Solar, Inc. (FSLR) - free report >>

Published in